A recent report from asset management and ETF firm VanEck, led by Matthew Siegel and Nathan Frankowitz, examines Bitcoin fundamentals, adoption trends, and emerging volatility in the wake of Fed rate cuts and the upcoming U.S. presidential election.
Bitcoin adoption shift
the a report The report highlights that Bitcoin’s price has risen 124% over the past year, significantly outperforming almost all major asset classes. Within the cryptocurrency sector, Bitcoin’s dominance — measured by its market cap relative to the total cryptocurrency market — has increased by 15% year-over-year, to 56%.
Despite the company’s strong price performance, it notes that the dynamics driving bitcoin adoption have changed. In 2023, bitcoin saw a 155% increase, reportedly driven by “shards,” which allow users to store media files on Blockchain Attract retail liquidity and trading fees.
However, the firm found that this trend has reversed, resulting in a 93% drop in daily registration transactions. Consequently, the decline in on-chain activity has led to a decline in daily active addresses and transaction fees, suggesting that Bitcoin’s current price rally is driven more by its role as a store of value than retail transactions.
This shift indicates that institutional players are increasingly using Bitcoin to store and transfer value. Coinciding with this trend, Bitcoin-linked currencies have become Stocks Cryptocurrency markets saw an 87% increase in market cap, reflecting the growing adoption of Bitcoin as an investment vehicle.
Fed Rate Cuts, Harris and Trump’s Diverging Paths
Looking ahead, Van Eck asserts that the interplay between the Federal Reserve’s monetary policy and the political landscape will profoundly impact Bitcoin and the broader space. Digital Asset Market.
Suppose the Federal Reserve continues to cut interest rates in response to economic challenges. In this case, the company expects this to create a favorable environment for risk assets like Bitcoin, attracting investors looking for higher returns.
Next US Presidential Election It also presents a complex picture of Bitcoin’s future. Both possible administrations, led by current Vice President Kamala Harris or former President Donald Trump, are expected to maintain or even accelerate fiscal spending, which could lead to more quantitative easing.
This monetary policy, which is intended to stimulate the economy, may inadvertently create a favorable environment for risky assets like Bitcoin. However, the effect could be to undermine investor confidence if either administration adopts anti-business policies.
He should Kamala Harris With several potential candidates, such as Trump, keeping Gary Gensler as SEC chairman, or aligning himself closely with Elizabeth Warren’s wing of the Democratic Party, the asset manager expects the digital asset sector to face a more stringent regulatory framework.
Despite these potential challenges, the asset manager argues that a Harris presidency could benefit Bitcoin in the long run, because a more regulated environment could bring greater clarity and legitimacy to the crypto space.
On the contrary, there is a possibility Donald Trump The presidency is likely to favor a more liberal regulatory environment, which the company believes could benefit the entire crypto ecosystem.
Regardless of who wins the presidency, the company asserts that the “overarching trend” of rising violence against women is the prevailing trend. Budget deficit and rising national deficit The debt is likely to persist. Such conditions typically weaken the US dollar, creating a macroeconomic landscape in which Bitcoin has historically thrived.
At the time of writing, BTC is trading at $62,700, down about 3% in the 24-hour time frame.
Featured image by DALL-E, chart by TradingView.com
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